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Introduction: Cost volume profit analysis (CVP) is used to ascertain the effect on the company’s net income and operating income with respect to changes in costs and volume of the production of the company. The break-even point is the level of sales that is the minimum required to overcome fixed and variable costs of the company. It is the condition of no
To compute: The unit product cost and prepare an income statement for year 1 and year 2.
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Introduction: Cost volume profit analysis (CVP) is used to ascertain the effect on the company’s net income and operating income with respect to changes in costs and volume of the production of the company. The break-even point is the level of sales that is the minimum required to overcome fixed and variable costs of the company. It is the condition of no profits and no loss for the company.
To compute: The unit product cost and prepare an income statement for year 1 and year 2 and
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Introduction: Cost volume profit analysis (CVP) is used to ascertain the effect on the company’s net income and operating income with respect to changes in costs and volume of the production of the company. The break-even point is the level of sales that is the minimum required to overcome fixed and variable costs of the company. It is the condition of no profits and no loss for the company.
To prepare: The reconciliation that explains the difference between super variable costing and variable costing net operating income for years 1 and 2.
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Chapter 4A Solutions
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- vj subject-Accounting Hanks recently produced & sold 2777 units. Fixed costs per unit at this level of activity amounted to $8; variable costs per unit were $9. How much total cost would the company anticipate if during the next period it produced & sold 6919 units? Note: assume this level is still within the relevant range Round your final answer to 2 decimal placesarrow_forwardProblem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, It produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses varlable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year…arrow_forward1 of 4 Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 27 $ 15 $5 $2 $ 540,000 $ 190,000 During its first year of operations, O'Brien produced 94,000 units and sold 78,000 units. During its second year of operations, it produced 80,000 units and sold 91,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $75 per unit. Required: 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in…arrow_forward
- Chapter 6: A Closer Look on Cost Accounting The company makes 2,350 units of product X a year, requiring a total os 3.300 machine hours, 250 orders and 200 inspection hours per year. The product's direct material cost is P201.50 and its direct labor cost in P211.11 per unit. The product sells for P590 per unit. According to the activity-based costing system, the gross margin for product X is? 423,087.50 b. 350,435.50 c. 416,890 d. None of the choice a. 56. The following information is available for Mary Corp. Activity Pool Setups Quality Inspections Assembly (direct labor hour) What is the activity rate for setups? Activity Base 50,000 120,000 400,000 Budgeted Amount 300,000 600,000 2,000,000 a. P5.09 c. РО.75 d. P58.00 b. Рб.00 The activity rate for quality inspection is: с. Рб.00 d. P5.09 a. P5.29 b. P5.00arrow_forward15 es [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $77 per unit in two geographic regions-East and West. The following information pertains to the company's first year of operations in which it produced 59,000 units and sold 54,000 units. Variable costs per unit: Manufacturing: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $27 $ 10 $2 $3 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of…arrow_forwardProblem 5 (Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements) Lyns Company manufactures and sells one product. The following information pertains to the company's first year of operations: Variable cost per unit: Direct materials Fixed costs per year: 130 P7,500,000 P4,200,000 P1,100,000 Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Lyns produced 60,000 units and sold 52,000 units. The selling price of the company's product is P400 per unit. Required: 1. Assume the company uses super-variable costing: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 2. Assume the company uses a variable costing system that assigns P125.00 of direct labor cost to each unit produced: a. Compute the unit product cost for the year. b.…arrow_forward
- Required information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 27 Direct labor $ 16 Variable manufacturing overhead $ 3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 590,000 Fixed selling and administrative expenses $ 190,000 During its first year of operations, O’Brien produced 96,000 units and sold 73,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O’Brien produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $80 per unit. Required: 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means…arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 27 Direct labor $ 16 Variable manufacturing overhead $ 3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 590,000 Fixed selling and administrative expenses $ 190,000 During its first year of operations, O’Brien produced 96,000 units and sold 73,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O’Brien produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $80 per unit. 4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in…arrow_forwardProblem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 24 Direct labor $ 16 Variable manufacturing overhead $ 4 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 220,000 Fixed selling and administrative expenses $ 140,000 During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company’s product is $54 per unit. Required: b. Prepare an income statement for Year 1, Year 2, and Year 3.arrow_forward
- ! lapter Seven Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and sold 42,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Saved Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $25 $ 20 $2 $4 Net operating income Net operating loss $ 644,000 $ 388,000 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 is a common fixed expense. The company will continue to incur…arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 26 Direct labor $ 15 Variable manufacturing overhead $ 5 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 570,000 Fixed selling and administrative expenses $ 140,000 During its first year of operations, O’Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 85,000 units and sold 99,000 units. In its third year, O’Brien produced 87,000 units and sold 82,000 units. The selling price of the company’s product is $79 per unit. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it…arrow_forwardMaxwell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations Variable costs per unit: Manufacturing: Direct materials.... Direct labor Variable manufacturing overhead Variable selling and administrative ..... Fixed costs per year: Fixed manufacturing overhead. Fixed selling and administrative expenses *********** IME $18 $7 $2 $2 $200,000 $110,000 During the year, the company produced 20,000 units and sold 16,000 units. The selling price of the company's product is $50 per unit. Required: Prepare Income Statement under both Absorption Costing and Variable Costing Methodarrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
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